Responsibilities in tax practice;

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Responsibilities
in Tax Practice
by Neil R. Bersch
The author's remarks are based on his participation
as a member of the Tax Division of the American Institute
of Certified Public Accountants and its Committee on
Responsibilities in Tax Practice. As such, they are based
on the feelings and experiences of many tax practi­tioners.
Your responsibilities in tax practice include a respon­sibility
to the firm, to your client and to the Internal Reve­nue
Service, as well as to yourself. By now you are
familiar with the five Responsibilities Statements issued
by the Tax Division of the American Institute of Certified
Public Accountants. These statements discuss such
things as when you should sign a return, use of estimates
in tax return preparation, and other responsibilities.
You may be wondering why there have been only five
Responsibilities Statements issued by a committee that
has been functioning for over eight years—that deserves
some explanation. The committee has very carefully
considered every proposed responsibility statement.
They have taken their assignment seriously and, before
issuance, each proposed statement receives careful
scrutiny by the committee members individually and as a
whole; scrutiny not only as to the substance but also the
precise wording. This has resulted in as many as 28 or 29
drafts of a proposed statement and three to four years in
the development. The committee is presently working on
three more proposed Responsibility Statements that I
want to discuss because of their significance in terms
of tax practice today.
Advice to clients
The first one deals with the question of Advice to
Clients. It originally started out as "Follow-up on Advice
to Clients." But after rehashing this several times, there
were a lot of people who said, "We're not sure we have
any responsibility to follow up or update advice previ­ously
given to clients so let's eliminate any inference in
the title to'Follow-up'."
What happens when you give written or oral advice to
a client on a particular matter and subsequently the
code or regulations change or a case is decided which
is contradictory to the position that you have taken? Do
you have the responsibility to get in touch with your
client? And if you have the responsibility, for how long
do you have it; an hour, a week, a day, a month, a year?
Does it make any difference whether the advice was oral
or written? Let me give you an example of a very disturb­ing
actual instance which occurred in a reported case.
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